CNDT - Earnings call transcript Q1 2018

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning and welcome to the Conduent Q1 2018 Earnings Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation there will be an opportunity to ask questions [Operator Instructions]. Please note this event is being recorded. I'd now like to turn the conference over to Alan Katz. Mr. ahead. go please Katz,

Alan Katz

and call. welcome ladies quarter Conduent's XXXX earnings gentlemen, morning, to and first Good

on call me Walsh, Joining today's Conduent's and Conduent's CFO. Brian CEO; is Ashok Vemuri,

call will Following on remarks, used the for of this during filed section copy take morning is was slides also the call Investor the your of our Relations the being we Conduent download questions. with prepared this and a webcast, available This website. SEC is

post also We the this week. transcript will later

reported in in measures. prepared measures Because Company's today as law. be includes non-GAAP in Report financial U.S. GAAP. are intend forward-looking as and make are or accordance by may not as to of management's We cause except the executives results address these that SEC. accordance these number current that actual contain U.S. presented to Private information new Conduent GAAP, update subject Litigation statements may assumptions call, in factors filed do statements included XX-K Conduent's to, is results these this substitute are of future nature comments reflect certain developments, and forward-looking uncertain. concerning differ with statements. the a for, on calculated result or as Information These by beliefs, those defined Securities XXXX, addition future materially of factors not in of with required with During from are information matters viewed that events their the to expectations a should in statements they not as Annual and XXXX Reform The XX, a Act and today, the May that Form

turn comparative With regarding and measures SEC well issued please on X-K. we morning of that, was this Form Ashok will purposes, definitions them, for see call was remarks. to as and for over his For the the furnished to as how their press our which I non-GAAP prepared usefulness information release, more as limitations use our to

Ashok?

Ashok Vemuri

XXXX our cover our and joining financial Good will sustainable I our presentation. morning, you Conduent quarter everyone. call. to And Brian an and also update Brian predictable take progress provide and for a profitable, first enterprise. performance into earnings I your question and and operational on our transform thank will following

begin on Let's that with Note of XXXX comparing the I our accounting quarter. our and overview Slide results new will be X the for performance our divestitures. an adjusting of first the standards impact for

start We are a year. to off solid to the

few facet work are starting the We for results Adjusted to to last on I actions of are highlights noteworthy. on reached in quarter. but important are we year. Revenue, several milestone the that a strikes this quarter. of an are quarters. company, every strategic have we range and taken, the to share, across was business, zero see adjusted revenue an the making when the to the metric we for year. will Profitability in line began There strategic core flat stabilization revenue growth total pivot X% next encouraging This in also allowing last revenue standout sign company of compared grew our to Commercial us actions. of a is this was top segment

was meaningfully, year. cash in flow focus combined quarter. improved the Adjusted cash with what fact this profitability basis and performance Cash, margin resulted improved points seasonally management, points quarter of year Our a another EBITDA ago. typically improved weak QX an to up half on cash prior in versus by free of grew quarter basis our XXX XX.X% that use our margins cash strong the in XXX quarter. Adjusted adjusted operating XX% was EBITDA was this the is acute adjusted and despite it

are well sheet get balance to liquidity. and we continues in of stronger, Our positioned terms

track our on the right announced are past plan. Finally, divestitures divestiture We several we two weeks. in with

XXXX our parking represent off consulting business, actuarial and in $XXX million collectively these Our HR business revenue. suite and

customer $XXX value of that Additional EBITDA of profitability are additional Having approximately part to not as in core services said from are I'd solution model. are divestitures announce margins These not from in also that, revenue care and top bundled this, to differentiate support it transactional achieving where on it an of goals. we standalone we required business of course an revenue continue customer end-to-end as like targeting is work provided are in divesting our million our today of customer meets part positioned contracts. $XXX a And contracts progress. represent the we provide long-term higher targeted support of when will public million to of select adjusted support sector

I As of very final guidance. this are When on stages the our I of with progress that efforts more quarter. of original and well to work, our will am in for divestitures Overall, first the detail we the a the have result we the signed, relative rightsize approaching adjusted business. in describe in our later. core our our we to pleased my business are focus core company characteristics comments positioned

me highlights some additional Slide share from let the on Now, I’m quarter. X.

on strategic deliver track done by year. end of target calls, an I on cumulative transformation I this As to the savings initiative. have will on update prior We our our of million cost provide $XXX on remain

been on large aspects for updates us. six of customer has Here contracts underperforming some this work. The are a of care focus several remediation

of from remember one five You call contract the addressed major large last that six to address. with contracts we’ve the might

XXXX. the a price successfully QX, for remainder resulting we During remediated contract, this last of in increase

contract We divestiture. this part also care customer to aforementioned include of now the the as have option

as the Real year. negotiated continue will high remained progressing early come with and Either and our we cost locations, historically work option results XXXX. and contributor exit margin are across profitability account through overhead our well. also by to large profit centers next estate have consolidation negative IT We in scenario and transformation Consolidations to networks, data improvement.

expense percentage of a XXX as to spend down management. revenue our continue to SG&A of We was an year, last compared also to make progress overall XX.X% basis and on improvement points.

SG&A highly towards and are greater previous on with on commented marketing. sales of shift mix focused our we in investment steady I’ve calls, a As

sales QX, help to go-to-market same drive the Greater spending During in turn X% to will growth, year. related last our singings our in which engine revenue period investments would growth. compared increased support return

our Moving I a will X, Slide to go on quick update through performance. segment

Our many best commercial in business had QX its years.

as when on reported efficiencies. adjusted X% increases line underperforming improved EBITDA improved price commercial as better technology deployment, cross-selling and down was a revenue quarter others to through Adjusted X.X%. our well XXX remediated and in expansion actions. points basis exited segment for Profitability service grew drove strategic penetration, revenue While operational X% we also basis, margins contract, the leverage as by

traction markets and the market, new from gain with seen to clients starting services also reintroduced businesses interest and Conduent in our tailored four into European have a we in we’ve capabilities. as those priority Our country

Our public percentage top expected strategic this points sector business X% of was actions. with result from performed being Revenue line of X a perspective. the as down about

leading. $XXX,XXX result More by the end of per efficiency, several contracts XXX productivity a industry per of to approximately and despite price margins person adjusted increases Revenue year-on-year importantly, high-margin as technology year continues deployment. be improved points our operational last basis of year, EBITDA

terms cover our pipeline. I Moving and to signings in sales X, performance Slide will of

go-to-market progress We initiatives. continue our to make very good in

this you been focus for an us. area of has know, As

model sales our reoriented have industry around verticals. We

signings but as client productivity industry leadership signs quarter. strong were achieve encouraging pipeline for increase see five improvements heads business based improved take from on-boarded up on compared billion, these Total $X.X in and a full XX% very Renewals We and signings business the one we absolute same with us quarter dollars. more have sales year It invested mix, the throughput. in were and in capability year-over-year as new TCV this period quality, partners, investments, XXX% well will than deal to new ago.

and is rate terms, team at client profile while Our shoring. number. to industry deal we requirement transient been an for to My be has our and XX% for management standard to this, risk leading active continues achieve renewal able continue strong

to signings greater shoring. more deliver last business value, client higher selective vision underpinned approach the margins and were our potential customer the to deals, by that align bundled opportunities lower with New signing million, business a active were platform for $XXX deals discourages company. Signings standalone drive versus by year. than care XX% These contracting new for impacted technology

participants. In new a longstanding defined Importantly Consumer contract of in for wins In new innovative and impact. services. early Again, we that deliver client services first we nation's for installation, year to secured Healthcare a though, clients a industry Conduent independent demonstrating won logo the across the major our retiree the In for in segment and modernization medical new current Insurance renewal a quarter. with companies. or finance standalone and and we key and our with had in model updates. Europe, new We provide operation workers’ capabilities, eligibility the sector, longstanding accounting most along benefit, having defined traction large model. changes Industrial with we renewals Conduent new providers notable an new automotive are compensation client are contract capability, client we one getting renewal services with new with a signs public for for a range technology existing experienced In business comprehensive XX% plan aerospace a XX continues arrangement formal design, to of wins, that during and contribution multi-space a the extended multiyear our partnership with major the space, go-to-market on the secured project the engagement our were a and yet to segment, industry rely of seals strong

both an new from important is of area and sales focus engagement, for existing Our strategy, me. go-to-market perspective client the

right putting more of our the business. to our that function making win than sales focus are the We and we back ensure fair investments on share

accurate to the and from our new very profitable our strategy and feedback build us methodology, and This help deploy clients platform We business. will robust have go-to-market more solutions. maximizing software for pipeline of received our positive deals, a new opportunity and while reliable engagement

We it. plan are have and executing a we game on in place

pipeline, we In see serve. the terms of industries continue to we healthy across demand the current

platform segments, pipeline represented of transportation, I that financial deal pipeline approximately just $XX fit government, on realistic, banking increased public high-tech today. pipe is Overall, and and the focus a deals and these Our bundled discussed. in and criteria deals. within and the based reflects clean well profitable are And services and billion discipline finally

support clients this and have team out business. win opportunities built right to We these the to

I observations. will I Before Brian, results over with several to recap hand our

to in During improvement progress the segment. in the signing to two particular operating are began turnaround strategy and grew starting first our business. quarter, seeing results look adjusted adjusted expectation. in show, I in progress efforts from divestiture redesigned is our our making margin and forward and the income We encouraging This We commercial our commercial in go-to-market call. EBITDA good since XXXX earnings deals line last program, with continual

business, as non-core we more are have We announcing detail. standardized some I’ll active enabled resources care us of the to strengthen of finally, on take divestiture Brian. is and Brian up for to shoring. service that, core, With potential select team, focus prior the standalone offering the will scalable, position then platform a make business allow technology a remarks best-in-class in us through to high-margin, And which brief will business solution. based, opening provider it with our Q&A. the our financials for that and customer

Brian Walsh

Thank you, Ashok.

some I begin, to I items. modeling Before want discuss

several call, everyone XXXX as in First, comparables. earnings that year-end to will factors want impact remind I have we that financials year-over-year will discussed our

and appendix, the revenue. both after completed recognize how As divestitures standard well will GAAP and that of in pass-through deferred for as we postage and standard. in numbers, change adoption our such, impacts throughout primarily This the for XXX we exhibits we the the results as and revenue adjusting revenue accounting XXXX, recognition the the year-over-year QX presentation provide accounting

detailed block XXXX basis We segment on our for by appendix. more quarterly have in also a provided results a the

the made we several to segment. Second, changes have other

sector. of and on discussed the the other into the health enterprise out public business call, last As earnings we moved

businesses. commercial our moved segment divestures into also XXXX public easier sector other We for level compares QX the and for the segment

XXX down Now, with first a was of results, financial X% quarter and of been XX% a about year-over-year down currency and and the begin on walk-through about overview let's P&L. revenue impact Revenue X% over the have basis. adoption, year-over-year. quarter a Slide reported billion standard XXXX the little $X.X QX the constant on for as divestitures an would for of X accounting the Adjusting

progress as The on quarter mentioned for remarks, from declined improving Ashok in EBITDA flat. margin have continued gross adjusted impact in the the increased with improved. transformation contracts. year-over-year an points. As increase margin Adjusted XXX of Gross driven was XXX basis pricing operating the improvement of Adjusted the $XXX our reflects and was guidance decisions points, our year-over-year prior the contract XX% X% the XX.X%, strategic EBITDA his revenue further improvement been increased as XXX impacts. divestitures, basis margin by initiative and year-over-year despite impact an range. and remediation, both excluding adjusting to was investments. transformation of of XXX grew would midpoint excluding initiative margin million, in the and primarily SG&A remediated and reported divesture our XX.X%, This and in line was reported and improving

below QX by to primarily loss $XX XXXX million, increased line, associated transaction Moving cost margin on transactions. the operating and the with divestitures due expenses

past legal settlements to a this quarter QX other with litigation line The of $XX termination related our and increased technology accrual as one partners. million for comparable by some contract an in XXXX have expense we

in quarter worse and by accruals. the costs first loss million, $XX was share. was $X.XX by pretax million quarter driven million increased Our or the per GAAP loss in net transaction litigation $XX $XX

rate the period. was XX.X% adjusted prior XX% in in the Our compared year quarter to tax

Adjusted mix increase tax prior million provisions EPS our compared and $XX of the rate. of QX period offset by lower million, the net $XX up of $X.X result a corporate impact geographic and of As year adjusted with federal an was the with GILTI income and compared was $X.XX, XXXX. earnings BEAT tax

of results the and through results, to accounting compare go for XXX impact the public I'll adjusting standard. I the our As XXXX QX segments, sector commercial

reminder, XXXX segment. XXXX businesses other results to QX the a were the divested As for moved

commercial decisions solely the Turning X, driven we contracts. accounts X%. of our long to provide declined and decline by commercial exit overview QX Year-over-year, Slide will revenue an unprofitable segment tail was results. strategic This

would we grown decisions, have year-over-year. X% strategic Excluding

cost sequentially, a increased efforts. through XXX addition, and remediation in was year-over-year, flat and the profit adjusted revenue Adjusted EBITDA points X.X% despite XX% relatively quarter. primarily EBITDA transformation including margin by savings being higher commercial XX% by basis price In our increases driven typically revenue QX Segment year-over-year. segment by initiatives, grew segment of contract increased our

progress encouraging commercial margin be we’re tends obviously on the and While lower year a QX for quarter we making on given are I’m is note. to see year-over-year. starting business seasonality, a to glad profitability our This strong

for volumes declined as to and was X% segment a sector impact we on Strategic of Slide Now accounted of business. the on year-over-year Revenue some local the sequentially decisions. X to clients transportation results of state XX. on the public losses Revenue strategic and percentage continue some year-on-year lower have as decline. from points contract actions down X% result loss

in this public business other quarter's sector We and As health the this investing moved earnings health beginning enterprise core clients. stated the as our see segment our we now from call, support was business placed within and quarter. to are enterprise last

market. to we're We that have bringing modules

aim Our grow to over is business this time.

transportation Our was year-over-year sequentially. down and business

the a QX. large contract in of in area still of this XXXX business expect the expected around tolling by is growth end show However, we to as

driven the segment XX%, Our initiative, The basis basis margins was EBITDA while was up savings quarter sector profit sector points this XXX margins adjusted points. business our margin by public public EBITDA up and segment improved profile with cost X%. up adjusted XXX of up

to on review other Slide our Moving XX, let’s segment.

is only holds segment now other education which run-off. in our business, The

with and was businesses. the million divested and the was reported The of without while segment from revenue results decrease slide million impact $X from results in impact chart However, show million include the the quarter. a XXXX and in this the divestitures, loss year-over-year, segment quarter, divestitures. as XXX excluding XXX the both $XX $X Segment on the

last very cash an $XXX of million and million pleased million exit with an Slide was revenue, This We segments operations the XXXX. year. to adjusted do the distributed QX in the XXXX, from X.X% quarter to QX in and flow of in QX so and Cash I’m largest revenue was $XX to CapEx the million for QX of XXXX. increase zero of dispersed payment of with our cash a $XX in planned will XXXX. of cash break-even strong the by the the in provides compared and an we’ll bonus QX, $X increased or QX driven is of of use we million plan, outflow million as XX participants free employees million by the our deferred cash acceleration $XX compared this XXXX was from portion outflow time quarter. Despite in throughout an We’re of aiming capital. for performance overview flow be our tax The QX. quarter compensation to continue in compared our result get XXXX. improvement held XXXX working termination in flow only purposes, of a CapEx with use with a flow $XX of a $XXX

the flow accordingly. discussed in our operating I’ve of flow As cash and adjusted be free disclosed out reported will past cash through

addition, the on, expenses as In free tax divestitures that flow other adjusted working cash of well. will and of payments divestiture number we're related given out be

Turning provide an to Slide on update our I'll capital XX, structure.

During end $XXX $XXX deferred of just exclude cash the cash adjusted the compared at associated compensation QX XXXX. I cash, million with which of discussed balance with was adjusted million the plan

expect potential use of $XXX to acquisitions. approximately million cash to continue We for

$XXX terms In million of we over liquidity, of our capacity revolver. also have in

at adjusted of compared end Our turns to ratio the XXXX. leverage X.X X.X net is turns at

leverage that, that’s was the first a cash typically our increase quarter are in ratio in Given we expected. user of

businesses, we our quarter, weeks, the over XX, past we the that In Slide signed agreements divest announced remaining for are several potential well where on divestures Moving off-street I the adjusted of million generated as EBITDA to update the once revenues divestitures. second we to proceeds the XXXX. will as provide cover We’ll annual these million consulting an actuarial $XXX service in $XX HR approximately which in close. and XXXX. in and These deals parking businesses on generated

After the expectation use to months, have would we next our few contribution the in past, about As we We proceeds businesses that would close the expect should also ranges this overhead these I businesses of these for and I'll take of is sale said that or impact $XX we months identified adjusting loss in XX%. acquisitions. $XX margin these discuss with adjusted also approximately either the businesses EBITDA for note expect deals moment. guidance for have the in would to million will associated be year. we these to and our we that debt repayment the of stranded costs from XXXX. of overhead have from potential a take a out, out million six

businesses these sell the support public We costs. million divesture, of on stranded revenue $XXX six the in that targeted before are transactions so working Of through these expect $XXX still that we we million we’d have transactions, to original cash have approximately to we’ll months we sector revenue. overhead for of

customer non-core, million process in looking of approximately that earlier, As annual $XXX representing Ashok mentioned we contracts we’re to options view of at revenues. the care as divest select

we provide average. we’ll have EBITDA sign and financials additional margins details. adjusted the initiative below this a of deal, terms revenue can In make this that corporate will progress in as But confirm base well I

the We ranges close morning, the I guidance changed. we last that want on from a during that Before would QX to expect the the note adjusted of past billion $X.X to signed anticipated to Approximately several weeks. that divestures. I date is issued provided details announced an close, Slide XXXX have using revenue our guidance the call these would press $X.X If of XXth. XXXX updated over in the important on XXXX XXXX and we from based is now with date XXXX that note we the year-over-year XX expected June impact signed that The divestures signed earnings this It release close divestures, changes the these excluding the compared billion $XXX impact impact amounts. table the divestures of between revenue. million the of billion $X.X result be not impact

a Approximately EBITDA adjusted million of EBITDA divestures. expect compared of and of between the adjusted $XXX We be $XXX XXXX the result million million. year-over-year $XX signed $XXX XXXX impact million is to with

free is adjusted XX% our Finally, be XX% EBITDA. expected to cash of still between flow and

We very questions. of for outlook are additional I now year we the well on and take made with will and before divestures. for performance, your over comments positioned pleased our turn QX to-date it the some to we’ve the our progress in Ashok terms

Ashok Vemuri

Thank you, Brian.

creating wrap at Before the shareholders on value kind employees, few elaborate our all I’ll society our our our clients, and the a large. way and spend up, Conduent of to are becoming, we is company minutes stakeholders, for we

portfolio put greater Over a services year, growth differentiation been refining market-leading achieve are market These to platform to common I those slides and will positions advantage. have use There have allows and us scalable, thread, businesses, which we focus capabilities our convey are this. opportunities. the to profitable last and and price strategic on two based, which have

go is on one I how Moving not to you. details, And it depiction to was earnings this with it clients. of a page hence into Slide whereas, our work we This much reinforce call. I’ve shared XX. the we will for important our as perform about think last

the scale. intensive, We work manage essential We participant for clients happening deliver to transactions on an services value individualized our the repeatable, at massive chain to clients end-users. of data our how behalf are in

bundled are interaction enrollment offerings of stages platforms transaction to technology combination from complementary from service a of all experience. processing delivered Our services, with to customer end account through management covering user business

of Here for industry tolling automated of government reference the We in We for is the payments XX% are U.S. funding approximately a provided $XXX points business. across our country, approximately the companies the billion for ambition the some XXX the operating scale manage and their of to the citizens our systems of an ensuring scope manage the range we become benefit benefit base, broad bold to provides our offering list. Fortune and every history, for largest long deep client in portfolio Together, year. outsourcing decades HR And basis administration and to some full leader. provide

and their and the the word, We manage with most they while of with some aspects interfacing are operations, of partner valuable essential serve. companies people the directly in largest a

the is technology their the layer of proprietary that our bottom two-thirds enterprises. are services them modern, clients, also diagram own underpin progress this provide over of at platform These solutions to that support while essential revenue. for digital services we and journey Looking and become helping on our our offerings

identify to core defining Slide illustrate lens how are business, way this the context are key our acute we core around acquisitions well both provide on driver details growth, next using we Moving value divestitures. strategic the focus and with XX, client, examples. turnaround more share and the for An phase of the will to our This our redefining some for are should around we the our core creating as a as plan, I more business is dimensions. into transitioning following revenue along five successfully

and off uniquely the center previous the the slide. our work at clients’ positions service we First, delivery us nature The chain. do building of of

We secure are users. our of and delivering clients at at the individualized, experts compliant to massive on interactions end behalf scale

manage distribution their we members. work supporting on of states benefits employees large in supporting their communication or the country consider the do to insurance between companies and behalf or example, of the the companies, As in

for rely and engine. of process as business business standardized into integrate and on differentiation, scalable accelerated, service deployments third-party services diverse multiple deployment. basis of technology a supported bundle delivery interacting aspects the services Next, agile our digital to specifically we platforms efficient allows software and that platform us with major This are on service propriety and or to a complex

the value $XXX are of of our have like connect relatable of new in almost the robotic service investment I trolling that with our and new our platform, And technologies modernizing every involved proprietary is highway million will payment mentioned cognitive aspect technology tolling platforms we example automated blockchain, As system. chain easily which aggressively learning automation. and incorporate in process collection, previously,

business way to as core yield level efficiency Our scale. a must and to a be conducive standardization of

margin. client step, being non-core. our common consulting customized was one the be from is and business we why reason platforms can that first This HR are a As deploying actuarial on solutions

asset, one custom technology having and to each no of is related kind. engagement a addition In

step, allow this on next from it model flexibility in call by world, of to must issues us addressing the across we And or our gives leverage opportunities investments. shoring. the us innovations anywhere cost. technology create locations utilize best the our active a common with scale, methodology source Four, to As we we return will for to human availability by core And client talent the scale and portfolio, and industry. balance capital domain identifying will reapply our

across agile transportation businesses from our legal portfolio from compliance. our in our profitable we reiterate providing I and and my assets, deployment optimism base. the want defining ecosystem, to within organic forge unification for these existing We create from how among a palette revenue flexibility a growing line platform help to care, These range conversation that gain on. core of to array commonalities trajectory scale efficiency growth, relationships. more an is provide core of solutions modern characteristics to growth. Finally, assets with In are represent needs core. which fundamental HR a relationships of represent for potential presenting developed we our client by closing, the expand meets can our client industries ways our health our of and service we Increasing new penetration for our explore and are Connectivity, that businesses

are our at market-leading chapter even as delivering I investors. detail value productive transforming about June Investor company, just and proposition am this a confident employees to oriented business and our clients, We services growth be for Conduent will become differentiated a next into I look on Xth. going one completed. more to we company you just have our Day forward as the Thank that

let’s Q&A. open call for Now, the

Operator

you. Thank

Instructions]. this question-and-answer JPMorgan. at from And the first will Puneet Jain [Operator with question We point session begin now comes

Puneet Jain

be growth will divestures quarter divestures second customer like And seems It new renew margins, care should margin. and hurt to both be low accretive should growth but businesses.

debt as overall deploy question there flow and M&A is proceeds from think about you my pay one, down, how divested your actions? right should we So cash is and second, those that on and impact free

Ashok Vemuri

Ashok, So Puneet question. I will address this this is

understand. the the is need market take based, cross investments in the much they of platform they flow described standardized, that opportunity. well look and shoring have as the on that first is our If than certain it growth very improvement make or in these be characterize drive the the is we way of in I practically which at at are better the important the I will acquisitions come where can financials the at think in look worse. the portfolios, that could better cash terms the corporate If divestitures that are so the I I at between what the that also today prospective accretive, EPS be be In on whether whether selling to point our at have scalable, doing reasons portfolio, for actions fact well the of it’s are of And foremost with which and time. drive it’s -- these profile average. using and technology terms we position cash fact forward, the to few and portfolio on and I they company there assets a within that divesting various accretive. there future the be about I explain earlier conclusion proceeds EPS look opportunity I'm not revenue where continue taking all just underpinning, in make, down are think be can the whether better the important margins looking opportunity divestures and and just that as they profile, – the the average whether is plus to financial of its why margin delta for of and to how that can between assets I active we these what in financial whether off the that businesses, profile If doing have to will that, it businesses situations, level, and to growing are what below we and I It level, margin be. to they it, capability we’d whether at about potential is a that factors it’s is portfolio growing for not and as

We as shareholder our optimizing business better are drive to as service that order in our rightsizing business and value, maniacally a focused to provide customers. well on

Puneet Jain

the of guidance 'XX And depends NRR transaction in other in backlog is or fiscal on or much of volume? it words, much already revenue how how

Brian Walsh

of of Most a backlog. the public signings, of would actions would of progress that the both lot is Puneet, and backlog. in lap some in to be took the lap in continue the from last some we But we’ll we cancels its strategic as as There NRR. sector. our be year year of some And expect Brian. inside revenue we we new it business the ARR

side, see As we we I ramp the one We tolling expect and commercial the on deal we’ll improvement. see progress. to to mentioned, it that see start quarter-by-quarter

Operator

Thank Bergin comes Bryan from you. with question And Cowen. our next

Bryan Bergin

asset the on sale up Follow question.

you the average? So new in the can as you on margin just think aggregate. the company to then net public comment $XXX of the compared profile to sector And million impact of sales about we

here Do than margin lower both trajectory? you are to average that to that with made to you've get care customer need offset sales and planned million. additional the the $XXX business the that For

Brian Walsh

look by we profile billion we margins. lower that that company would But care average, the the If out on deals the overhead we’re margin, customer I take improve is what cost. remove dollars has we the as than the stranded we a the company two once the XX% margin $X customer of divest divest, overhead at billion, driven is margins looking including care say that to that is signed. costs, we that that So standard the the as

accretive once proceeds. we businesses revenue as grow market that believe And we we to said, that are then they the better deploy and compete us EPS it flow strong. be the it in are Ashok competitive to and have positions cash will in to that As markets

So flow profit we over cash time. divestitures to key line view performance, improvement top these as improvement,

Bryan Bergin

looks just target, on run the cost the track on then And it be from to $XXX the million takeout, rate.

update an you on last to relative that stand now Can give where rate were You ahead run of quarter. that? us you

Brian Walsh

to So improvement, cover. to incremental other drive this we right over in and is drive drive on $XXX But trying million we’re are and track was assets million investments $XXX sticking that we’re the profit million potentially of to $XXX but over now, with achieve. need year well an That to we savings working to achievement.

Operator

next And you. Thank the Jamie question comes with Susquehanna. Friedman from

Jamie Friedman

benefiting transportation I wondering commercial? enterprise, you M&A, was which anticipate from mean public like I health segments or Ashok, versus

Ashok Vemuri

acquisitions at technology looking our we��re tuck-in So enhance capability. to in order

space, not mentioned fairly sector in public opportunities In the have footprint going see we're or contract revenue before, are space. is there I As federal to small. acquisitions, do our which acquisitions. government clearly aggregating the I

that growing now technology for opportunities technology the are good the have we given state and the are payer commercial is There business, business, clearly in tuck-in health fast opportunities there. in there emphasis in deployment think core acquisitions In compliance business. which business with government in business growing something is the we very around I opportunities there consider remediation done our segment I that space, enterprise especially our very the on are for fast. think

sector sense. in the would think we places where the I have well I a few as commercial think in So public make sector, both M&A, as

Jamie Friedman

think remarks, in called then ramps improve tolling tolling. sequentially Brian, growth? contract the terms we I in your and in anticipate line that top the performance as And prepared of out Can will in you

Brian Walsh

correct, Yes, sequentially. that’s year-over-year and

Operator

the comes you. Research. with Cross question Thank Shannon from next Cross And

Shannon Cross

here, bit there to understand a again, trying moving I’m are so parts just little many right. --

know, you do talked a can when a so revenue more going any of can’t on normalized end are that, get an that exactly that, that -- But closer -- that payment But really we acquisitions. might we you also within Is making debt -- level? $XXX then as have just money. not or that the is how on we give make for more you’re So EPS idea plan you I that’s And when then tell depended say 'XX, acquisitions? can driving. a getting you’re to you ramp make through to talking us you XXXX, down us about get terms where accretion you in million of about quarter or we’re

Brian Walsh

Brian. its Shannon Sure,

plan, options also available the have million from also debt. We've use cash of $XXX of So divestures we through potentially But been the today around for down for at some plan. we’re would looking lowering our execute more paying we paying and all both about that as to interest plus a divestures. paying we’ll acquisitions. debt have additional going communicate We’ve And it. But to the down start we down acquisitions, prioritizing been acquisitions. cash potential and it’s debt, we be

reviewing second divestures pipeline of as we’re we right We the looking prioritize and that towards a now. will the acquisitions have weighed and But at half be more working. that

Shannon Cross

are is… changes we that your EBITDA thought some and of you’re margin you’re And the the doing, or timing How the the about think then thinking the you magnitude as making. about because changed Has progression? of divestures of

Brian Walsh

otherwise get have. help this we’ll will the long-term I once So about through improve at get But to Day. than we’ll to bottom think position talk than line year corporate about think more these margin work as the a margin us to we overhead And is target billion divestures and top our both the Investor years, would dollars cost the out, we and lower line divestures. we this the faster. these But us average out this stranded at faster

Shannon Cross

And just -- more in then thought. just of that one line

flow overhead leverage, the the do to you to further assume, stranded forward? and to thinking then about restructuring business. would get in the you in of guess, of terms loss how I were that Or and obviously cost down? Do cost incorporated try is the needing in XXXX, anticipate going cash that, I In already

Brian Walsh

we’ll stranded think to the we continue as that do taking to to we cost a incorporate next drive need about else and margins. overhead out year, have So everything program

We views for the restructuring provided and aside before. have money we

the be reconfirm to we the us those after stranded for 'XX into I it overhead. we've of to and it past cost As we But said that’s the we’ll Day, phase go cause in next the going we’ll beyond restructuring get amounts. and And have shouldn't think have what Analyst our modeled in the takeout journey 'XX.

Operator

the Thank comes Brian Essex you. question next with from And Stanley. Morgan

Brian Essex

could more around maintain is current potential the how on about you’re that discipline side, Brian, you acquirers buying for you more for selling? see Maybe discipline? the Who the activity whether whether pricing How you’re the getting like maintaining And environment it’s you those what assets? financial? are, the talk assets strategic

Brian Walsh

competitive we we We and these. is process through that good. market run say advisors So have I would that a the that of professional is each use

financial both all have We and and been interest competitive. have these strategic

Brian Essex

selling as though -- fixed. maybe sale fix thought or proposed those noting your of as of team, sale just little guess them, rationale those those. rationale are mean know not was you, that on better a on bit for little you giving But little more were a towards a I get maybe now way that already ones the I just a businesses. work as bit behind try that a the the then I businesses what you behind And process, just the for are to of And the rational those. price management go. customer care spending it’s block?

Ashok Vemuri

This is Ashok.

identified, done get attractive more These them to opportunity We've that when scope and heavily or the this They a businesses focused them U.S to that. parts concentrated, real U.S. the if are we around make are done from is to in estate in large Clearly, hands have remediate business. scalable. not print. oriented, heavily divestiture we our opportunity wanted this us to we give technology very not the perspective. a size, needed the obviously, cross not So and to will, They of time the no you most foot sell. up at occupy and are a They remediate

all center transactional to something that given So that elements have of divest. we identified call work these the as we intend standalone

end service more over the of bring, bundled -- and allows it value platform. the actually a support drive much we cross, bundle in the it. and customer Now of what us a of opportunity chain that's part of at because bundled, But part technology is the of lower it's transaction, what up experience sell a to continues be to albeit business maybe remains

the have in which of we for So customers do we to divestiture rationale, the the that’s business intend used care. that

Operator

comes question next Atkins from with the And Frank you. SunTrust. Thank

Frank Atkins

talent some I can wanted and retention. to headcount update the as see get mix, an around global commentary on well I if acquisition as

Ashok Vemuri

Yes.

people. about QX, X,XXX was overall by headcount past quarter, So down our in this

and for quite both drive shoring, are. terms our these the terms how We’ve in technology in run our and we operations both and operations talent, in aggressively, where aggressively identified Guatemala, services our well clients, we the active Philippines, of deliver to of very as example, to in continue way Jamaica and epicenter from of are We company, talent up ramping hubs, Jamaica Philippines four core India, Guatemala. talent; we for as India;

are progressing we well. So

capability terms the think business in I talent, and new I mentioned five of heads. management

to despite come very the think down, the quantity client way our think I also hire more that customers to actually or They executives We've we've are has in And find co-located seen our the board. the our client. on being of market, positively. in engagement -- the very the beginning that pretty amenable change to we're reacting dramatically dramatic We’ve market, business improved. been a new lot in I are that of teams. to signings able talent with into a seen

to had a very renewal strong speaks the rate think that also speaks I The fact renewal that. we’ve that fact. growth, to

in -- I’m good actually a able place the that very talent business, I’m feel that terms in So of getting. to drive with and being

important are about, is marketplace that which and have goals very talent talked helping as who very a the well achieve drive as not This us. hired we talent want. from hired we also is a for lot that cartridge M&A. industry We’ve activity have this of for the divestures our We good a

Frank Atkins

to And analytics an are go? get Where where driver update could of that How your see then I a on do offerings, of business. peers. analytics some in if incorporating stand often can It’s also the in I wanted you there? you growth and your

Ashok Vemuri

So transactions, oriented. And you a its productized driven service, stack. applications of I close as about recall most two-thirds our past platforms the data or providing that well a whether said technology whether is of in that it our, business of may is heavily of is have

between ton our for data a So we of the end-consumer of you conduit, flowing are the clients. if will,

our being middle us insight, if also So intelligence we capability. provide engine data will, ramp which up And provide on to the but you sit or just we data, the that are requires increasingly to the a in obviously analytics that of be throughput ecosystem. asked not

are before. and than more to So have providing terms of the we as are people pipeline, end about they of of level the and adding a that as in that to a technology lot data if layer of technology very in insight both to transactions as our not from Because management one most we but a on my the well both good clients. as see I capabilities, other, just enterprise being intelligence data, steward higher well our deployed end-user, analytics aggressively, the

we’re So you middle sitting digital in the will. of if that interaction,

refer So to what as If business, give a close at in today. on revenue to divested kind a XX% what conversation, to big the we businesses did not digital work. of of amount from of divesture comes to XX% that. And potential is had they to described I or that’s where business a us. I we more significant The that's because we’ve again, do look margin I time my because generally us this to the terms accretive, want spend for the would opportunity expand want say back that,

Operator

Instructions]. next Citi. comes [Operator Thank the you And from Suva Jim question with

Jim Suva

that does to is what said yet you And perfectly original that some that those Ashok’s Are is talked the then remarks. to by makes rightsize to a identify prepared there to divestures, you about in divestures that, June, want, sense. like you you then I think said in couple come? to addition company And identifying more incremental? your was do believe you plan, then there have or traditionally, are which When those following more you the

Ashok Vemuri

of the we had to So $XXX-odd have announced range which $XXX $XXX million. earlier achieved million million, of we Jim,

another all standalone which million time of to divestures have is an as of complete. $XXX the million. this, $XXX top With have announced previous customer today our divestures, We $XXX million million a of On $XXX we phase the additional that of that, care. part is the

we’ll and the is may over are come or technology growing now, pivot end. I want the look business. what amplifying market business. But business -- is as are with for the our to like obsolesce then core think change positioning we We at left this to Obviously, we core away our we years, things back.

is where to it to get that is process reduction, it said can acquisitions a now the concluded. Brian amplify can from point into job terms we that as is And Our the work whether appropriate making in in to be this whether business. debt of the invest proceeds core

Jim Suva

last up my low clarification divestitures, those margins. layer then the at corporate like follow additional is, And sounds are and of

forward did even Day a now and company go more Investor your looks So you to say am than I profitable year ago? margin correct your than half that at be

Brian Walsh

divest billion largely for a standalone and once the which the average a at That help take faster. EBITDA long-term dollars, look by a overhead. average, now stranded and driven we have looking us will it’ll we’re has you If margin. lower on get out customer care And that's very to business, margin low target margin company

Operator

you. Company. the next comes and And Thank from question with Needham Mayank Tandon

Mayank Tandon

business in also Ashok, talked of you've terms an more of see some sales when terms we expect the maybe in of where of then in progress in investing business about investments? signings? force. you terms you're and in in to in new terms core the these could of do terms consistency us growth Maybe that both at give from update And

Ashok Vemuri

we this that our started the of day are a terms the optimum -- sales team us over I to to Numbers a few process number. took number. it very So am last actually engagement happy where but and team with quarters, our client in get obviously one, while is

there. we are think I

talent. We right have the

we a industry. well. of a don’t signings We takes that But clients having the are time some and It have in the and The we seeing business renewal do a consistent news amount the of this to that have we people up. news takes can skill hearing you certain the to all obviously, as that feedback to base perspective. we install from see is the in and business, have Well of the happening obviously, amount that from not clients, of It’s are business is new hired it that from good And actually do right we’re resonance and for liberty easier are the that existing is set. that hearing time pretty. the predictable trajectory. ramp

HRS whether We have specializes accounting, business. in and new leadership outsourcing our benefit that and legal is it in this it’s compliance, in business, finance in whether whether it’s total

or client strong long great I have to experience, vertical we importantly, as our focus the non-core, we team these actually gives have faster. most that be connect of yield. coming businesses definitely wait to with period drive and in, the with who provide with much that that, on because So having the for are not a much on time focused performance us not making are ramp-up to to with the technology, that great leaders investment for investments more think able against we focus, opportunity an and do we will in yield sales to a importantly are

Mayank Tandon

That’s question. helpful, just follow-up and one

can words, you based the you the get sourcing the other active actually on and just to cost-cutting additive In than global global the EBITDA Is mix additive to the of would be in business program to call takes you terms margins more target that place think of that mid-teen over the you once have that longer-term? sourcing, even off, it I margin mentioned, In time? shoring.

Brian Walsh

through active get definitely of cost to overtime. shoring into we’ll part active big the of attack base how shoring that of That's transformation program, us the But margin is part it. and automation will part help targets going ’XX and the is a

Operator

return time, closing to Vemuri the Ashok Thank I any call comments. like at for to would you. And this

Ashok Vemuri

being Thank a here. to fairly quarter. had information the digest There is you. And thank for you call. on everybody a We’ve lot of busy

have busy to quarter. a fairly continue We

the We middle in a divestures. work-in-progress are on of our

of steps first the seen You’ve that.

catching benefit is definitely, is proceeds in the shareholder around sheet, our the more an accretive off and forward and full all growth. both a will clients. use be of I revenue on so manner balance you where the to in and think talking cash understandable think more business easily up to accretive importantly, as impact we value-additive our Xth I much. is as EPS about think the a to from and perspective, Thank and much core divestures will business lot that that June to we accretive focused, we our With a finish more this flow and the to that, will of we you a with look pivot I drive

Operator

today's you Thank you. Thank The presentation. conference attending has for now concluded.

You your lines. may now disconnect

Conduent (CNDT) 9 May 182018 Q1 Earnings call transcript